The First Digital Liquid Venture Fund Will Raise Capital Using An ICO
Blockchain Capital, a leading venture capital investment firm that focuses on blockchain technology, aims to disrupt the financial industry by offering fund investors unprecedented enhanced liquidity. This, the company’s third fund, has two components: a traditional limited partnership called Blockchain Capital III, LP, and an evergreen fund called Digital Liquid Venture Fund.
Acting as a pioneer, Blockchain Capital is the first venture fund to offer its own digital tokens (issued by an unknown Singapore entity) that would represent an evergreen fractional ownership in the new fund. This move would provide investors with a liquidity mechanism through a smart contract-driven token that is hyper-liquid as well as tradeable.
The focus of the new fund will be to identify the latest and best blockchain technologies across industries beyond finance, while leveraging a massive new blockchain-based capital market. Managing Partner, Brock Pierce, said:
“I see these ICOs as the path to enhanced liquidity for early-stage investors and the democratization of not just the financial system, but the democratization of our own industry.”
Benefits of Blockchain Capital’s ICO model include access to deal flow and proprietary opportunities, flexible deal structures, transparency, lower fees without middle-men, and exposure to top tier blockchain companies.
Pierce is no stranger to blockchain technology or ICOs, as he was instrumental in the first blockchain ICO for Mastercoin (now Omni) and was also one of the trailblazing investors in the Ethereum crowdsale. Identifying the lack of timely liquidity as one of the main problems with traditional venture funds, Pierce believes that this new model will serve as a major disruptor to the venture capital industry.
According to a video interview:
“Early stage investing, whether you be an angel investor, a venture capital investor, or a limited partner coming into a venture fund – the biggest problem with this sector is that it’s been delivering phenomenal returns, but it’s illiquid – investors don’t want to have their money tied up for five to ten years,” said Pierce.
In addition to being the first venture capital fund to offer a digital token, Pierce and his team also believe that they are the first to understand and deliver a regulatory-compliant roadmap, “which will become the roadmap [Pierce thinks] will fork going forward.” Furthermore, Pierce states that other ICO implementers in the blockchain space have designed convoluted structures in an attempt to avoid regulation, rather than dealing with it head on.
“I’d like to think that we’re going to show people how to do this correctly, going forward, and I think that will be a great thing for the industry,” said Pierce.
Both international and domestic investors are able to participate in the fund and purchase BCAP tokens. However, US investors must be accredited, meaning their income must have been $200,000 during the previous two years or they possess a net worth of $1 million or more.
According to Forbes:
“Depending on the jurisdiction, international investors will be able to resell [BCAP] 40 days after purchase, and U.S. investors, after one year. Shares past their lock-up period can be resold even to non-accredited investors.”
While the terms of the token sale offer a certain class of domestic investor opportunities to participate in Blockchain Capital’s ICO, “everyday Americans” seeking to invest will need to wait at least a year before doing so – a disadvantage to say the least.
It’s worth mentioning, many of the current and past ICOs in the blockchain space (many convoluted, according to Pierce) do not offer US investors legal opportunities to participate in their respective crowdsales because of US security laws.
Blockchain Capital’s current portfolio is comprised of 43 companies, including BitFury, BitGo, BitPesa, BlockCypher, Blockstream, Chain, Coinbase, Gem, GoCoin, ItBit, PeerNova, Ripple, Wave, and Xapo, along with other blockchain technology leaders. This new Ethereum-backed ICO may prove to expand their fund partnership while also building up the ecosystem of the Ethereum network and other blockchain-related technologies.
Full details of Blockchain Capital’s offering will be discussed in the company’s memorandum, which is expected to be published on April 3, 2017, via www.vctoken.com.